Personal Finance

Are you owed compensation for your packaged current account?

The number of complaints about ‘packaged’ bank accounts – that’s the current accounts you pay a monthly fee for – are soaring. An astonishing 1,000 people a week are putting in a complaint to the Financial Ombudsman Service (Fos) saying they were mis-sold a packaged account.

That adds up to around 25,500 customer complaints in the first half of 2015, more than in the whole of the previous year.

But those figures don’t necessarily signify a major mis-selling scandal. While many people have, in the past, ended up with paid-for current accounts that weren’t suited to them that isn’t the sole reason for the massive number of complaints.

Fos is laying some of the blame at the door of claims management firms. These companies advertise everywhere, telling us all we are entitled to compensation for something we’ve been mis-sold. They made a small fortune out of the payment protection insurance scandal, and now they are looking for their next buck.

As a result they are encouraging people to file complaints about packaged bank accounts. They help file any paperwork and in return take a cut of any compensation offered. The fact that only 10 per cent of complaints about packaged accounts are upheld shows the influence of these firms: they encourage as many people as possible to complain, often regardless of whether the person has any grounds at all.

This doesn’t mean people shouldn’t complain – and if you do need to, you shouldn’t need to sacrifice some of your compensation to a third party who will often just submit a templated letter.

Have you been mis-sold a packaged account?

A packaged bank account is one where you pay a monthly fee – usually £10 to £25 – in return for a range of benefits. Typically, you will get travel insurance, mobile phone insurance and often a car breakdown service.

In some cases these accounts can work out as good value. For example, Nationwide’s FlexPlus account costs £10 a month but includes breakdown cover – which would cost £80 a year – and worldwide travel insurance. So, as long as you travel regularly this would save you money.

The issues tend to arise when someone has been moved on to a packaged bank account without their knowledge. So they are paying for benefits they may not be using, or that may not be suitable – and which in any case they did not ask for.

Alternatively, you might have applied for a packaged account without realising that the benefits weren’t right for you. For example, the insurance doesn’t cover what you need.

How to complain

The first thing to do is check whether you have a packaged bank account. This is pretty simple: check your statement and see if you are being charged to have your account.

If you are, then do you remember applying for it? Anyone who doesn’t should check. Some banks did automatically upgrade customers and if that has happened to you it is mis-selling and you should make a complaint first to your bank. If you aren’t happy with the outcome then take it directly to the FOS.

Even if you knowingly took on the account you could still have grounds for a mis-selling complaint. Take a look at all the benefits that come with the account. Do you need them? Are you paying for car breakdown when you don’t have a car, or travel insurance that has an unsuitable age limit, or traveller limit that means it is no good for you.

If you think you’ve been paying for benefits that you can’t use then you could have been mis-sold the product. Again, complain to the bank first before taking it to the Fos.

If you are going to complain do it yourself, don’t use a claims management firm. Making a complaint is straightforward so there is really no need to pay someone else to help.

Just write to your bank outlining what your issue is and what you would like them to do – a refund of the fees you’ve paid plus compensation is the norm. Keep a copy of all correspondence and if necessary include it with a letter outlining the situation to the Fos.

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